NWA, Unions to Talk on; Deal Near — Judge Gives Sides More Time to Cut Costs By $1.4 Billion

By Jane Roberts robertsj@commercialappealcom

A U.S. bankruptcy judge Friday gave Northwest Airlines, its pilots and flight attendants until late Wednesday to work out their differences – an extension that indicates the sides are very close to an agreement.

Northwest and the two unions told the judge they have continued to make progress on negotiating new contracts.

“This is such good news,” said Terry Trippler, airline expert at Cheapseats.com. “I expected the judge to either do exactly what he did or lock them all in a room and say, ‘You’re not getting out until you get an agreement.’”

He expects the flight attendants to come to an agreement over the weekend with the pilots following suit Monday or Tuesday.

“I’m not advising anyone to buy or not buy a Northwest ticket. But would I buy a ticket now? Absolutely.”

While Northwest said it appreciates the extra time, it reiterated that it needs $1.4 billion in labor savings as soon as possible, saying it is losing $3 million to $4 million a day.

The parties have been negotiating since shortly after Northwest declared bankruptcy in mid-September. While they made steady progress all week, as late as Thursday, the pilots and the company were still $100 million apart.

On Feb. 10, the pilots voted to take a strike vote. The count is due Tuesday.

So far, customer anxiety has been almost nil, said Vicki Rush at A & I Travel.

“It is absolutely not anything that has entered anyone’s psyche. The date has been such a moving target, people think, ‘I’ll think about that later.’ “

The message in Friday’s news, analysts said, is the length of the extension.

“If it had been 30 days, everybody that cares about the economies of Tennessee, Michigan and Minnesota would be going nuts,” Trippler said. “The nonstop Amsterdam flight is critical to Memphis.”

The bad news for people around the negotiating table is “this is one ruined weekend,” said Michael Boyd, aviation consultant in Denver. “They’re going to be working around the clock.”

As part of its restructuring efforts, the company is seeking $2.5 billion in overall savings in order to return the company to sustained profitability.

The pilots agreed to $250 million in annual concessions in 2004. Northwest wants $358 million more in annual cutbacks from the group.

Northwest has reached agreements with three other unions and is awaiting a vote from its ramp and ticket workers.

When it wasn’t able to reach agreements with its pilots and flight attendant unions, Northwest asked bankruptcy Judge Alan Gropper to void their contracts and allow the company to impose its own pay scale and work conditions.

The hearing in the case began Jan. 17; Gropper’s decision was due Feb. 17.

On Feb. 16, he extended the negotiation period eight days. Friday, he offered the sides their second extension.

“What we’re seeing is basically a case of the judge really hoping the sides can work things out,” said Marty Graham, aviation consultant in New York.

“Typically, if a bankruptcy judge has to make a unilateral decision, it’s not in favor of the unions.”

While unions and management always have friction between them, “when a judge rules in favor of the company, it doesn’t help labor relations across the other unions.”

-Jane Roberts: 529-2512